| No | SDES-2018-19 |
|---|---|
| Title | On the General Impossibility of Persistent Unequal Ex- change Free Trade Equilibria in the Pre-industrial World Economy |
| Author | Soh Kaneko and Naoki Yoshihara |
| Abstract | This paper analyzes the persistency of the unequal exchange of labor (UE) in international trade. An intertemporal model of a world economy is de ned with a leisure preference and no discount factor. Every incompletely specialized free trade equilibrium is characterized as having non-persistent UE, which veri es the convergence of economies without relying on economic growth or diminishing returns to scale. In particular, it characterizes a sub-class of equilibria in which the sequence of real interest rates does not con-verge to zero, but UE tends to disappear while equivalently the distribution of capital assets tends to be equalized in the long run. |
| Revised version published in |